Shares of tinyBuild, the U.S. publisher of indie games, experienced a decline after the company warned that it may not meet analysts' expectations due to various factors. At 0830 GMT, shares were down 1.4 pence, representing a decrease of 22%, settling at 4.75 pence.
In an announcement made on Tuesday, tinyBuild stated that its projected revenue for 2023 is anticipated to be in the range of $40 million to $50 million. However, the upper end of this range is dependent on the signing of significant contracts before the end of the year. This figure falls short of the market consensus of $49.9 million provided by the company.
The company also highlighted that a majority of its revenue is still being generated from lower-margin third-party games. As a result, gross profit margin has been adversely affected. To address this challenge, tinyBuild has implemented a two-pronged strategy. Firstly, it has expedited its cost reduction plan. Additionally, it is now focusing on lower risk and higher-than-expected return projects to achieve a reduction in cash outflow by $5 million to $10 million per year starting in 2024.
As part of its strategies for realigning investments, tinyBuild is considering a future equity fundraise of up to $10 million. This move aims to provide the necessary financial resources required to support its objectives.
Furthermore, tinyBuild revealed that it has reached an agreement to settle an employment claim with a general manager by paying $3.5 million.
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